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CEO turnover and chronic corporate underperformance are examined through the lens of Transgenerational Response.
Abstract
Purpose
CEO turnover and chronic corporate underperformance are examined through the lens of Transgenerational Response.
Design/methodology/approach
The criteria for investigating Transgenerational Response in corporations consisted of identifying a Critical Corporate Incident, the number of corporate generations and the resultant corporate financial performance.
Findings
The evidence presented in the case studies illustrates how a Critical Corporate Incident has produced the consequential effect of chronic financial performance in the years following the incident.
Research limitations/implications
These case studies have not presented the “actual” adaptive responses, inherited attitudes and behaviours that have subsequently embedded themselves in a new corporate culture, post the Critical Corporate Incident, to the detriment of the long-term health and performance of each firm.
Practical implications
Examining CEO turnover and chronic corporate underperformance through the lens of Transgenerational Response means that business leaders can identify how a historic event has affected the performance of their firm in subsequent generations. With this knowledge in hand, they will be able to examine the inherited attitudes and behaviours, organizational policies, strategy and adaptive cultural routines that have combined to consolidate the firms chronic under performance.
Originality/value
This is a highly original, evidence based, idea that has the potential to reshape our current understanding of CEO turnover and underperforming firms. It will help business leaders identify how a historic event has affected the performance of a firm in subsequent generations.
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Keywords
This paper provides further evidence on a thought-provoking idea, Transgenerational Response, which was previously presented in this journal. It argues that a corporate crisis…
Abstract
Purpose
This paper provides further evidence on a thought-provoking idea, Transgenerational Response, which was previously presented in this journal. It argues that a corporate crisis event can create dysfunctional adaptive attitudes and behaviors which subsequently become embedded in the corporate culture of a firm to the detriment of its long-term performance.
Design/methodology/approach
A multi-method approach consisting of longitudinal content analysis of innovation and risk words in corporate annual reports and quantitative financial analysis divided the data into ‘what happened before the crisis event’ and ‘what happen after the crisis event’.
Findings
Case studies for AIG and Yahoo illustrate how a crisis event produced chronic financial performance and adaptive cultural responses that include a fall in innovation and an increased emphasis on risk in the years following the incident.
Research limitations/implications
This paper does not make claims of generalisability of the findings. However, it does provide a platform for future researchers to develop this line of reasoning and perhaps extend it to consider why some organizations demonstrate greater levels of resilience when faced with a crisis.
Practical implications
Identifying a Transgenerational Response means that business leaders can identify how a historic event has affected the performance and cultural dynamics of their firm over time. As such, it will be easier to manage the inherited cultural attitudes and behaviours that have combined to consolidate a firms chronic underperformance.
Originality/value
This highly original, evidence-based idea, has the potential to reshape our current understanding of corporate turnarounds, CEO turnover, underperformance and adaptive cultural change.
Jefferson Marlon Monticelli, Renata Bernardon and Guilherme Trez
The purpose of this paper is to analyze entrepreneurship in the context of the second, third and fourth generations of family businesses, considering the family as an institution…
Abstract
Purpose
The purpose of this paper is to analyze entrepreneurship in the context of the second, third and fourth generations of family businesses, considering the family as an institution and mapping the reasons and influences to institutional forces across generations.
Design/methodology/approach
Three focus groups conducted for the study revealed that each generation has dealt differently with issues related to institutional forces, such as legitimacy, business professionalization and succession.
Findings
The perpetuation and transmission of entrepreneurial behavior has been greatly influenced by the family and this is especially clear when it is seen as an institution that unites and binds its members, while guiding or restricting the choices available to these agents through limits imposed on them. The family exerts a strong institutional influence across generations, both defining boundaries and creating opportunities for its members. Regardless of the generation of family business, the family founders and their successors’ responses are modeled by institutional forces.
Research limitations/implications
The main limitation is concentration of focus on a specific context, Brazilian family businesses. Therefore, the results are limited to this case. With regard to the methodological approach, the authors employed cross-sectional data collection, making it difficult or even impossible to make a historical analysis of the facts that are limited to the present perceptions of the interviewees. It should also be considered, from the institutional perspective, that the authors only analyze the family as an institution, leaving out of the context other institutions and institutional dimensions such as the political and industrial, for example.
Practical implications
This study helps to explain entrepreneurship in the context of the second, thirrd, and fourth generation of family businesses, considering family as an institution, mapping the motivations and influences of institutional forces across generations. The relevance of family as an institution as drivers of family businesses, as demonstrated in this study, can contribute to decision making and succession of family businesses. Equally, the results can contribute to avoidance of the possible pitfalls of transgenerational changes and facilitate better management of problems such as legitimacy caused by a lack of norms and procedures or transfer of tacit knowledge.
Social implications
There have been few attempts to understand the dynamics of the family business as an institution that also consider transgenerational changes. Rather, family business has been analyzed separately from institutions. Institutions are rarely taken into account in studies of family businesses. Consequently, a perspective that aims to understand the relationship between family businesses and institutions, taking account of transgenerational influences should further theory. Transgenerational family businesses are an appropriate object of study in this context, because of the institutional changes they undergo due to the influence of institutional forces over time.
Originality/value
This study shows the relevance of understanding how these issues are dealt with in different generations of a family institution. Aspects related to entrepreneurship in the context of family businesses have been attracting attention from researchers interested in family businesses and scholars of institutional entrepreneurship.
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Jiawen Chen, Pengfei Li and Linlin Liu
This study aims to examine the employment practices of family firms in emerging markets. Drawing from the social exchange theory, the authors propose that transgenerational…
Abstract
Purpose
This study aims to examine the employment practices of family firms in emerging markets. Drawing from the social exchange theory, the authors propose that transgenerational control intention enhances the motivation for family owners to engage in favorable employment practices as inducement for future contribution of employees.
Design/methodology/approach
Multilevel regression models were applied to test the hypotheses with a sample of 3033 Chinese private family firms.
Findings
The results show that the employment practices of family firms are positively associated with transgenerational control intention, and the effect of transgenerational control intention is contingent on regional social trust.
Originality/value
This study highlights the role of transgenerational control intention of family owners in motivating favorable employment in family firms. The study adds nuance to the variances in employment behaviors of family firms as well as the family owner-employee exchange relationship in emerging markets.
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Mumin Dayan, Poh Yen Ng and Dirk De Clercq
To extend family business research, this article proposes and tests a curvilinear relationship between social ties and family firm innovation, with the firm's market orientation…
Abstract
Purpose
To extend family business research, this article proposes and tests a curvilinear relationship between social ties and family firm innovation, with the firm's market orientation and transgenerational intent as moderators.
Design/methodology/approach
Representatives from a sample of 150 family firms in the United Arab Emirates completed self-administered questionnaires. Regression analyses on the collected data test the conceptual model and proposed hypotheses.
Findings
The empirical study reveals an inverted U-shaped relationship, such that a high market orientation mitigates the diminishing returns of social ties on enhancing family firm innovation. Similarly, at high levels of transgenerational intent, family firm innovation increases due to social ties, instead of exhibiting diminishing returns.
Originality/value
These results help explain contradictory outcomes previously attributed to social ties and offer clear guidelines for how family firms can leverage these ties more effectively to enhance their own innovation.
Details